
[Federal Register Volume 81, Number 244 (Tuesday, December 20, 2016)]
[Notices]
[Pages 92889-92890]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-30563]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79558; File No. SR-NYSEMKT-2016-114]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Change Modifying the NYSE Amex 
Options Fee Schedule

December 14, 2016.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on December 1, 2016, NYSE MKT LLC (the ``Exchange'' or 
``NYSE MKT'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to modify the NYSE Amex Options Fee Schedule 
(``Fee Schedule''). The Exchange proposes to implement the fee change 
effective December 1, 2016. The proposed change is available on the 
Exchange's Web site at www.nyse.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this filing is to amend Section I. E. of the Fee 
Schedule,\4\ effective December 1, 2016.
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    \4\ See Fee Schedule, Section I. E. (Amex Customer Engagement 
(``ACE'') Program--Standard Options), available here, https://www.nyse.com/publicdocs/nyse/markets/amex-options/NYSE_Amex_Options_Fee_Schedule.pdf.
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    Section I. E. of the Fee Schedule describes the Exchange's ACE 
Program. The ACE Program features five tiers, expressed as a percentage 
of total industry Customer equity and Exchange Traded Fund (``ETF'') 
option average daily volume (``CADV'') \5\ and provides two alternative 
methods through which Order Flow Providers (each an ``OFP'') may 
receive per contract credits for Electronic Customer volume that the 
OFP, as agent, submits to the Exchange.
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    \5\ The volume thresholds are based on an OFP's Customer volume 
transacted Electronically as a percentage of total industry CADV as 
reported by the Options Clearing Corporation (the ``OCC''). See OCC 
Monthly Statistics Reports, available here, http://www.theocc.com/webapps/monthly-volume-reports.
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    The Exchange proposes to make the following changes to the ACE 
Program:
     First, the Exchange proposes to add a credit tier and re-
designate current Tier 1 as the ``Base Tier.'' \6\ Currently, to 
achieve any credit under the ACE Program, an OFP must achieve Tier 2 
(which offers an $0.18 per contract credit). To qualify for Tier 2, an 
OFP must execute at least 0.75% to 1.00% of CADV or 0.35% over October 
2015 CADV. The Exchange proposes a new Tier 1, for which an OFP to 
qualify would have to execute at least 0.20% over October 2015 CADV.
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    \6\ The Exchange notes that that the qualification basis for the 
proposed Base Tier remains the same as it is under current Tier 1 
(i.e., an OFP must execute at least 0.00% to 0.75% of CADV) and 
there are still no credits available under this tier.
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     Second, OFPs that qualify for proposed new Tier 1 would be 
eligible to receive a $0.14 per contract credit. As with all other 
current tiers of the ACE Program, the take liquidity multiplier would 
also apply to proposed new Tier 1.\7\
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    \7\ See Fee Schedule, Section I. E., supra note 4 (``In 
calculating an OFP's Electronic volume, each Customer order that 
takes liquidity will be weighted as 50% greater (i.e., 1.5 times the 
contract volume) for determining Customer Electronic ADV and Total 
Electronic ADV'').
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     Third, the Exchange proposes that OFPs qualifying for new 
Tier 1 would also be eligible for the ACE Initiating Participant 
Rebate, which is currently available to OFPs that achieve Tiers 2-5 of 
the ACE Program.\8\
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    \8\ See proposed Fee Schedule, Section I. G. at n.2 (``The ACE 
Initiating Participant Rebate is applied to each of the first 5,000 
Customer contracts of a CUBE Order executed in a CUBE Auction. This 
Rebate is in addition to any additional credits set forth above. 
Only ATP Holders who qualify for Tiers 1, 2, 3, 4 or 5 of the ACE 
Program are eligible to receive the Rebate'').
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     Fourth, the Exchange proposes that OFPs that achieve Tier 
2 would receive a $0.19 per contract credit on electronic Customer 
Complex Orders. In this regard, the Exchange proposes to define Complex 
Order in the Key Terms and Definitions section of the Fee Schedule, as 
``. . . any order involving the simultaneous purchase and/or sale of 
two or more different option series in the same underlying security, 
for the same account, in a ratio that is equal to or greater than one-
to-three (.333) and less than or equal to three-to-one (3.00) and for 
the purpose of executing a particular investment strategy, per Rule 
900.3NY(e).'' OFPs that achieve Tier 2 would continue to receive a 
$0.18 per contract credit on electronic Customer volume (i.e., non-
Complex Customer order flow).
    The Exchange is not proposing any other changes to the alternative 
ACE Program Credit Tiers at this time.\9\
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    \9\ OFPs that achieve a qualification level in one tier, and 
achieve an alternative qualification level in another tier, will 
continue to be paid a credit based on the highest achieved tier. See 
Fee Schedule, Section I.E., supra note 4.
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    The proposed additional Tier would not impact the Firm Monthly Fee 
Cap of $100,000 per month per Firm, but the Exchange proposes to add 
reference to the Base Tier in Section I of the Fee Schedule to add 
clarity and transparency to Exchange fees.\10\
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    \10\ See Fee Schedule, Section I. I. (Firm Monthly Fee Cap), 
supra note 4. The Monthly Firm Fee Cap decreases if Firms achieve 
Tiers 2-5 of the ACE Program (i.e., greater than the Base Tier or 
Tier 1).
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    The proposed modifications to the tiers of the ACE Program as well 
as the additional rebate for electronic Customer Complex Orders are 
designed to further encourage OFPs to direct additional order flow to 
the Exchange, which additional volume and liquidity would benefit all 
Exchange participants through increased opportunities to trade as well 
as enhancing price discovery.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\11\ in general, and

[[Page 92890]]

furthers the objectives of Sections 6(b)(4) and (5) of the Act,\12\ in 
particular, because it provides for the equitable allocation of 
reasonable dues, fees, and other charges among its members, issuers and 
other persons using its facilities and does not unfairly discriminate 
between customers, issuers, brokers or dealers.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the proposed addition of new Tier 1 is 
reasonable, equitable, and not unfairly discriminatory because it 
provides an alternative means of achieving a rebate, which should 
attract more volume and liquidity to the Exchange to the benefit of 
market participants through increased opportunities to trade as well as 
enhancing price discovery.
    The Exchange also believes the additional credit on Complex Orders 
is reasonable, equitable, and not unfairly discriminatory, as it 
provides an additional incentive to achieve the ACE Program Tier 2, 
which should attract more volume and liquidity to the Exchange to the 
benefit of market participants through increased opportunities to trade 
as well as enhancing price discovery.
    The Exchange believes that the proposed amendments to the ACE 
Program are reasonable, equitable and not unfairly discriminatory 
because they would enhance the incentives to OFPs to transact Customer 
orders, including Complex Orders, on the Exchange, which would benefit 
all market participants by providing more trading opportunities and 
tighter spreads, even to those market participants that do not 
participate in the ACE Program. Additionally, the Exchange believes the 
proposed changes to the ACE Program are consistent with the Act because 
they may attract greater volume and liquidity to the Exchange, which 
would benefit all market participants by providing tighter quoting and 
better prices, all of which perfects the mechanism for a free and open 
market and national market system.
    For these reasons, the Exchange believes that the proposal is 
consistent with the Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\13\ the Exchange 
does not believe that the proposed rule change would impose any burden 
on competition that is not necessary or appropriate in furtherance of 
the purposes of the Act.
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    \13\ 15 U.S.C. 78f(b)(8).
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    The Exchange believes the proposed amendments to the ACE Program 
are pro-competitive as the proposed new qualification tier and 
incentive may encourage OFPs to direct Customer order flow to the 
Exchange and any resulting increase in volume and liquidity to the 
Exchange would benefit all Exchange participants through increased 
opportunities to trade as well as enhancing price discovery.
    The Exchange notes that it operates in a highly competitive market 
in which market participants can readily favor competing venues. In 
such an environment, the Exchange must continually review, and consider 
adjusting, its fees and credits to remain competitive with other 
exchanges. Because competitors are free to modify their own fees in 
response, and because market participants may readily adjust their 
order routing practices, the degree to which fee changes in this market 
may impose any burden on competition is extremely limited. For the 
reasons described above, the Exchange believes that the proposed rule 
change reflects this competitive environment.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.
    The foregoing rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) \14\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \15\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \16\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \16\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSEMKT-2016-114 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEMKT-2016-114. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NYSEMKT-2016-114, and should 
be submitted on or before January 10, 2017

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-30563 Filed 12-19-16; 8:45 am]
 BILLING CODE 8011-01-P


